Grant of Commutation under Employees’ Pension Scheme, 1995

GRANT OF COMMUTATION UNDER EMPLOYEES’ PENSION SCHEME, 1995

NOTIFICATION BY MINISTRY OF LABOUR AND EMPLOYMENT

Ref.: Employees’ Pension (Amendment) Scheme, 2020, New Delhi, the 20th February, 2020

BACKGROUND AND HISTORY OF THE NOTIFICATION

The labour ministry has issued the notification to restore pension commutation, or advance partial withdrawal, under the Employees’ Pension Scheme of the Employees’ Provident Find Organisation (EPFO) which shall come into effect from 20.02.2020 instead of January 1, 2020.

The move, which comes 10 years after the provision was withdrawn, follows a decision at a recent meeting of the EPFO’s central board of trustees and it will benefit around 630,000 pensioners.

As per the information from, the government official, these pensioners had opted for commutation of their pension and got a lump sum amount at the time of retirement from their pension accumulations or fund before 2009, when the provision for commutation of pension was withdrawn by the EPFO.

Hence in order to implement the EPFO’s has to decide to restore commutation, or advance part-withdrawal, under the Employees’ Pension Scheme, who did not wish to be identified by way of Notification.

RECOMMENDATION OF THE EPFO PANEL

Under the commutation, one third of the monthly pension used to be cut for the next 15 years and the reduced amount was given in lump sum. After 15 years, pensioners were entitled to get the full pension.

The EPFO’s central board of trustees, headed by the labour minister, had in its meeting held on August 21, 2019 approved the proposal to restore commutation of pension of around 630,000 pensioners who had opted for the benefit.

An EPFO panel had recommended an amendment to the Employees’ Pension Scheme, 1995 to restore commuted value of pension to pensioners after 15 years of drawing commutation. Earlier, under the scheme, government employees were allowed to commute one-third of their pension for 10 years, which was restored after 15 years.

BRIEF OF THE NOTIFICATION

In exercise of the powers conferred by section 6A read with sub-section (1) of section 7 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the Central Government hereby makes the following Scheme further to amend the Employees’ Pension Scheme, 1995, namely:-

(1) This Scheme may be called the Employees’ Pension (Amendment) Scheme, 2020.

(2) It shall come into effect from the date of its publication in the Official Gazette.

In the Employees’ Pension Scheme, 1995, after paragraph 12, the following paragraph shall be inserted, namely:–

“12B. Restoration to normal pension in cases of grant of commutation. – The normal pension in respect of those members who availed the benefit of commutation of pension under the erstwhile paragraph 12A of this Scheme, on or before the 25th day of September, 2008, shall be restored after completion of fifteen years from the date of such commutation.”.

[F. No. R-15011/01/2019-SS-II (Pt.)]

R.K. GUPTA, Jt. Secy.

Note : The Employees’ Pension Scheme, 1995 was published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i) vide notification number G.S.R. 748(E), dated the 16th November, 1995 and was last amended vide notification number G.S.R. 285(E), dated the 4th April, 2019.

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